Lease Option

FHA World - Lease with Option to Buy

A lease option to purchase is a contract in which a property is rented for a period of time and the renter has the option to purchase the property. The contract should be in writing and state how much the rent is, the time limit for the purchase, the purchase price, if there are any rent credit and any seller paid closing cost.

If a portion of your monthly rental payments are set aside towards the down payment of the property make sure you pay the rent by check and make sure you save the canceled rent checks. To receive credit for your down payment the mortgage company will need proof you paid your rent.

FHA World - Applying for a Loan

When the time comes that you want to buy the property under a lease option to buy you will need to apply for a mortgage.

You will need a minimum credit score of 600 for 3.50% down payment.

What documentation will I need?

• Fully Executed Lease with Option Contract
• W2's for the past 2 years
• Current pay stubs for the past month
• Bank statements for last 2 months for each active account with sufficient reserves (all pages)
• Latest retirement statement for each active account (all pages)
• Residence addresses for past 2 years (if you reside at your current address for less than 2 years)
• Clear copy of Driver’s License
• Clear copy of SS card
• Addresses and loan information of other real estate owned (if any)
• Personal tax returns for the past 2 years.

Minimum Credit Score of 500

FHA World - FHA Mortgage

Generally, a borrower who has made timely payments for the last 12 months serves as a guide and demonstrates their willingness to repay future credit obligations. New FHA Policy changes require minimum FICO score to be 580 for 85% loan-to-value. These FICO requirements went into effect in the spring 2010. However, most individual lenders will still require credit scores higher than 640.

A perfect credit score is not needed for an FHA loan approval. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a for a conventional loan. Sometimes scores down to 500 are accepted if there are compensating factors that offset the credit risk.

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We look forward to working with you.